Industrial production falls more than expected

Industrial production and capacity utilization fell more than
expected in February.

Data from the Federal Reserve on Wednesday showed
production dropped 0.5%, while 76.7% of productive capacity
was used, down from 77.1% in January.

Production was dented by big drops in mining and utilities.
Mining production dropped 1.4% as oil remained cheap, while
utilities production collapsed 4% amid warmer weather.

"The large drop in mining in February resulted from decreases in
crude oil extraction, coal mining, and oil and gas well drilling
and servicing," the Fed said. "Since late 2014, the index for oil
and gas well drilling and servicing has fallen more than 60
percent."

Manufacturing production rose 0.2%, and is up year-on-year
despite a drop in the aggregate number of hours worked. This
suggests an increase in productivity in the sector, according to
Renaissance Macro's Neil Dutta in a note.

"The chart shows that manufacturing output has rebounded a
bit over the past couple of months, pulling up the y/y
rate," wrote Pantheon Macroeconomics' Ian Shepherdson in a note.
"Surveys point to no further near-term acceleration, but the
deterioration seen last year appears to be over."

Pantheon Macroeconomics

Economists had estimated that industrial production fell 0.3% in
February, following a 0.9% rise in the prior period, according to
Bloomberg. They had forecast that capacity utilization was 76.9%.